What is a Business Credit Score and Why Does It Matter?
A business credit score is a number that indicates your financial rapport in the market. It explains
your creditworthiness in the business, your financial habits in regards to payment of dues, and how
you manage your finances. It also indicates if your company is eligible to avail credit from lenders.
Credit information companies like CreditQ generates your business credit score and company credit
information report based on several factors, including your payment history, credit utilization rate,
It’s recommended to check your company’s credit score to make out if you’re lacking somewhere in
making your business grow. Credit information companies calculate business credit scores based
on your business’ credit obligations and repayment history with suppliers and lenders. They also
undertake other things into account, such as tax liens, bankruptcies, and judgments, along with
determining how long your business has been operating and your company’s size and type.
If you’re a businessman who has recently ventured into a new business, it’s essential that you
maintain a good business credit score to take credit to purchase equipment, invest in production, or
make other business expenses. Lenders would consider your business credit score as a prime factor
in determining your financial credibility and if it’s safe to lend you funds: they forecast if there any
risk of delayed payments.
Why does your business credit score matter?
It’s wise to understand why your business score matters and how does it impact your borrowing
power. While you check your company’s credit score, you may find about your credit history. It tells a
lot about your borrowing eligibility. If you’ve used the funds in expenses other than business
purchases, lenders may withdraw their interest in funding your business. Take note that an
acceptable business credit score is important to secure financing.
Many times, new businessmen fall into the fraud trap where their money is stuck with some vendor
or supplier. How do you reach a point for payment settlement that is loosely linked to checking
business credit scores? Credit information companies like CreditQ offers a platform to expose your
credit defaulters who have troubled you with payments in the past. If your money is stuck with them,
it helps you get your money back. Not only do you find the defaulters with whom you would be
reluctant to do business in the future, but you also save yourself from fraudulent activities, especially
if you’ve started a new business.
Your business credit score matters a lot in determining your business’ financial health. You may
have developed a habit of delaying payments to your suppliers and vendors. It could be due to
misusing your borrowed funds that you’re not able to manage your expenses well. But if you check
your company credit score regularly, you may find out more about your financial obligations and
Business credit scores can influence the lender’s decision about revising the loan terms and rates
for you. It can also help them decide the repayment terms of your current credit as well. When you
have a good business credit score, lenders and investors may be willing to extend generous payment
terms, which would give you the financial freedom to invest in your next line of products.
It is equally important to understand how to maintain a good business credit score so that it helps
you generate funding for business growth. Firstly, pay your bills on time to save yourself from poor
ratings and reviews from your lenders and suppliers. Secondly, it’s better to reduce your existing
debts. You may be going through financial obligations in the current phase, but it’s better to clear off
debts as much as you can through smart payment options so that it does not hinder you to avail new
line of credit when required. Thirdly, it’s evident that you should check your company credit score
often to realize your financial position in the market. It helps you report any discrepancies in your
store and escalate them to the credit information companies to improve your score further.
You can use the CreditQ platform to check your business credit scores and report. It also allows you
to list your business defaulters so that you gain an advantage of payment settlement and save
yourself from fraud.